A Permitted Rights Scheme development in East Croydon of 258 high-spec residential units. There were no pre-sales but significant interest from housing associations in securing attractive terms.
- Leverage Secured 65% LTC
- Saving (Net of Fees) £2.6m
US PE Credit Fund
- GDV £106m
- First charge on development site and 258 units
- N/A (Development Funding)
- £58 million, 65% LTC
- Specialist provider
- Interest roll-up
- No pre-sales
- Competitive market with plenty of new residential supply
- 24 month facility
- 65% LTC, interest roll-up
- Highly competitive terms
A large privately owned development and asset management group were performing a Permitted Rights development in East Croydon. The scheme involved the conversion of a 20 storey 1960s office tower into 258 modern, high-spec residential units. While there were no pre-sales, there was significant interest for units from housing associations.
The client utilised us to benchmark the terms of its existing lending relationship. In addition to full underwriting and credit analysis, we conducted drone footage of the asset to show credit providers the physical attributes of the building, its surrounding locality and nearby competitor offering.
The team obtained significantly improved terms from a US PE credit fund, including a 140 bps reduction in the margin, a 100 bps saving in the arrangement fee, 75 bps reduction in the no utilisation fee and a 150 bps reduction in the exit fee. This equated to a £2.6m saving, net of fees. Aside from the better pricing, the new lender was able to transact more expediently thereby minimising transaction risk.
"258 prime residential units were planned in an existing block and planning approval had been obtained. Similar schemes in the area had sold at a rate of 8-14 units a month and based on these limits, it was anticipated that all 258 units could be sold within 18 to 32 months. With clear sales potential, a vast government redevelopment scheme committed to the area and an excellent property management team in situ, we were able to secure the financing they sought."